UK Govt issues downbeat message about no-deal Brexit risks related to trading shares in dual-listed cos

Maria Nikolova

“The UK authorities are not able through unilateral action to fully address risks to European investors seeking to buy and sell London-traded shares of companies with dual listings in the event of a no-deal Brexit”, says Lord Bates.

UK’s Minister of State at the Department for International Development Lord Bates has delivered a somewhat downbeat reply to a question concerning the risks that European investors face in the event of a no-deal Brexit.

Lord Taylor of Warwick has asked what assessment the Government has made of calls from European investors for regulators to protect their ability to buy and sell London-traded shares of companies with dual listings in the event of a no-deal Brexit.

Earlier today, Lord Bates answered:

“Delivering the deal the Government has agreed with the EU remains our top priority and the best mitigation against the issues arising in a no-deal scenario. Nevertheless, the Government has been implementing a significant programme of work to ensure the UK will be ready from day 1 in all scenarios, including a potential ‘no deal’ outcome in March 2019”.

“The UK authorities are not able through unilateral action to fully address risks to European investors seeking to buy and sell London-traded shares of companies with dual listings in the event of a no-deal Brexit. This would require action by the European Commission and the European Securities and Markets Authority to permit EU investment firms continued access to UK markets for London-traded shares of companies with dual listings”.

Let’s note that the Financial Conduct Authority (FCA) has been working on preparing the entities it regulates for all scenarios, including a no-deal Brexit. Earlier in February, the FCA outlined how it would use the temporary transitional power in case the UK leaves the European Union without an agreement.

The Treasury has put forward draft legislation that would temporarily empower UK regulators to make transitional provisions in the event of no-deal Brexit. This measure aims to minimise the disruption for firms and other regulated entities in such a scenario. The temporary transitional power would allow the FCA to delay or phase in changes to regulatory requirements made under the EU (Withdrawal) Act 2018 for up to two years from exit.

The FCA plans to make use of this power to ensure that firms and other regulated persons can generally continue to comply with their regulatory obligations as they did before exit. This will enable firms to adjust to post-exit requirements in an orderly way.

In addition, existing transitional arrangements such as, for example, the temporary permissions regime (TPR) will operate from exit day. The notification window for the temporary permissions regime is now open. Firms will have to notify the regulator that they wish to enter the temporary permissions regime using the FCA Connect system. Fund managers will also need to notify the FCA of which of their passported funds they wish to continue to market in the UK temporarily via Connect.

The notification window closes on March 28, 2019.

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